Sh. Gulshan Kumar Angrish, Ludhiana V. CIT III, Ludhiana

ITA 761/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77196 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 03-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Revision of order
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 761/CHD/2013 ASSESSMENT YEARS : 2008-09 GULSHAN KUMAR ANGLISH V C.I.T.-III, LUDHIANA FLAT NO. 614 BASANT AVENUE II LUDHIANA AAOPA 9511C (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ASHWANI KUMAR RESPONDENT BY: SHRI A KHILESH GUPTA DATE OF HEARING 9.7.2014 DATE OF PRONOUNCEMENT 24.7.2014 O R D E R PER T.R. SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 24. 5.2013 OF THE LD CIT-III, LUDHIANA. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS: 1 THAT ORDER PASSED BY THE LD. CIT-III, LUDHIANA L EVYING PENALTY U/S 271(1)(C) AT RS. 87824/- IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS NO SUCH PENALTY WAS EXIGI BLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 THAT THE LD. CIT FAILED TO APPRECIATE THE IMPORT OF DETAILED SUBMISSIONS MADE AND ARBITRARILY PROCEEDED TO LEVY PENALTY AT RS. 87824/-. 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT THE A SSESSEE HAD MADE CLAIM FOR VARIOUS EXPENSES ON ACCOUNT OF INTEREST, FORECLOSURE CHARGES, SERVICE TAX ETC. AMOUNTING TO RS. 454221/-. LATER ON THE ASSESSMENT ORDER WAS FOUND T O BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE R EVENUE AND A SHOW CAUSE NOTICE U/S 263 WAS ISSUED BY THE COMMISS IONER. IT WAS POINTED OUT BY THE LD. COMMISSIONER THAT THE AS SESSEE 2 HAD SHOWN BUSINESS INCOME OF RS. 359814/- IN ADDITI ON TO INTEREST INCOME FROM A FIRM M/S RAM LAL & BROTHERS, UNIT NO. 2 AS A PARTNER OF THE FIRM. THE ASSESSEE HAD ALSO DE CLARED A LOSS UNDER THE HEAD INCOME FROM OTHER SOURCES AT RS. 377028/-. IT WAS NOTICED THAT THE ASSESSEE HAD CLA IMED FOLLOWING DEDUCTIONS U/S 57 OF THE ACT: CITI BANK INTEREST PAID RS. 192369/- CITI BANK FORECLOSURE CHARGES MONEY INTEREST PAID RS. 221406/- SERVICE TAX RS. 27,502/- CH CLEARANCE CHARGES RS. 11,839/- ADVANCES RS. 1,105/- TOTAL RS. 454, 221/- ACCORDING TO THE COMMISSIONER THE ABOVE EXPENSES CA N BE ALLOWED ONLY IF IT WAS PROVED THAT THE EXPENSES WER E INCURRED FOR EARNING INCOME. THE ASSESSEE MADE VARIOUS SUBM ISSIONS AND ULTIMATELY THE COMMISSIONER DID NOT AGREE WITH THE SAME AND ENHANCED INCOME BY RS. 454221/- U/S 263. HE ALS O INITIATED PENALTY PROCEEDINGS U/S 271(1)(C). IN RES PONSE TO SHOW CAUSE NOTICE FOR LEVY OF PENALTY U/S 271(1)(C) IT WAS MAINLY CONTENDED THAT THE ASSESSEE HAD DISCLOSED AL L THE PARTICULARS AND NOTHING WAS CONCEALED AND THEREFORE PENAL ACTION WAS NOT ATTRACTED. 4 THE COMMISSIONER DID NOT FIND FORCE IN THE SUBMIS SIONS AND AFTER DETAILED DISCUSSION LEVIED PENALTY AT THE RATE OF 100% AMOUNTING TO RS. 87824/- WAS IMPOSED. 5 BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT AT THE BEST IT IS A CASE OF DISALLOWANCE OF CE RTAIN EXPENSES AND THEREFORE PENAL ACTION WAS NOT ATTRACTED. HE F URTHER SUBMITTED THAT SUCH EXPENSES WERE ORIGINALLY ALLOWE D BY THE ASSESSING OFFICER IN THE ASSESSMENT FRAMED U/S 143( 3). THIS 3 ITSELF SHOWS THAT LIABILITY OF EXPENSES WAS A DEBAT ABLE ISSUE. THE ASSESSEE HAD BORROWED CERTAIN FUNDS AND GIVEN T HEM ON INTEREST AND HAD EARNED INTEREST INCOME. AGAINST S UCH INCOME THE ASSESSEE HAD CLAIMED CERTAIN EXPENSES WHICH WER E INCURRED FOR THE PURPOSE OF EARNING SUCH INCOME. HO WEVER, SINCE THE ASSESSEE COULD NOT PROVE THE NEXUS BETWEE N THE EXPENSES AND INCOME, THE INCOME WAS ENHANCED BY THE COMMISSIONER IN THE ORDER PASSED U/S 263. THE ASSE SSEE CLEARLY STATED IN RESPONSE TO THE SHOW CAUSE NOTICE FOR LEVY OF PENALTY THE CLAIM WAS MADE ON BONAFIDE BASIS AND ME RELY BECAUSE THE ASSESSEE COULD NOT PROVE NEXUS THE PENA LTY COULD NOT BE LEVIED. IN THIS REGARD HE STRONGLY RELIED O N THE DECISION OF HON'BLE SUPREME COURT IN CASE OF CIT V. RELIANC E PETROPRODUCTS PVT LTD, 322 ITR 158 (S.C). 7 ON THE OTHER HAND, THE LD. D.R. FOR THE REVENUE CARRIED US THROUGH THE ORDER PASSED U/S 263 AND POINTED OUT THAT IN THE REVISION ORDER, THE COMMISSIONER HAS CLEARLY HELD T HAT THESE EXPENSES WERE NOT ALLOWABLE BECAUSE THEY WERE NOT I NCURRED FOR EARNING INCOME UNDER THE HEAD INCOME FROM OTHE R SOURCES. 8 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULL Y AND FIND FORCED IN THE SUBMISSIONS OF THE LD. COUNSEL F OR THE ASSESSEE. AT BEST THIS CASE CAN BE CALLED THAT OF DISALLOWANCE OF CERTAIN EXPENSES. IT IS NOT DISPUTED THAT THE E XPENSES HAVE BEEN INCURRED BUT WHETHER THE EXPENSES HAVE BEEN IN CURRED FOR EARNING THAT PARTICULAR INCOME UNDER THE HEAD INCO ME FROM OTHER SOURCES IS DOUBTFUL. THEREFORE THE ASSESSEE HAS CLEARLY GIVEN AN EXPLANATION THAT THE CLAIM FOR EXPENSES WA S A BONAFIDE AND MERELY BECAUSE THE ASSESSEE COULD NOT PROVE 4 NEXUS BETWEEN THE EXPENSES AND INCOME UNDER THE HEA D INCOME FROM OTHER SOURCES, DOES NOT MEAN THAT PEN ALTY IS ALSO LEVIABLE PARTICULARLY WHEN THE ASSESSEE HAD DI SCLOSED ALL THE PARTICULARS OF INCOME. ALL THE PARTICULARS OF EXPENSES WERE DISCLOSED IN THE RETURN, THEREFORE IT CANNOT BE SAI D THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE HON'BLE SUPRE ME COURT IN CASE OF CIT V. RELIANCE PETROPRODUCTS PVT LTD (S UPRA) HAS HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BED COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICU LARS IF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTI ON 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO IN FORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STR ETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISH ING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHI NG WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS T HE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF H IS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. FOLLOWING THE ABOVE, WE ARE OF THE OPINION THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY AND ACCORDINGLY WE DELETE THE PENALTY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 24.7.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24.7.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 5